Strontium in the News

TEN TIPS FOR KEEPING SANE AS YOU IPO YOUR COMPANY

Listing on London’s Alternative Investment Market for many companies is often a truly daunting, drawn out and stressful process. Lawyers to the left of you, NOMADS to the right, and here you are stuck in the middle with endless paperwork and midnight boardroom drafting meetings surrounded by the usual curling sandwiches and stale biscuits; the promised three month IPO timetable extends to six and just when you think it’s all over, the realisation strikes home that the Company is no longer yours, it’s the property of shareholders. Horror stories of the IPO process can be overheard in bars and gym locker rooms well beyond the boundaries of the Square Mile.

Notwithstanding the need to manage the process internally, the rigours of regulation on the stock market now add further pressure from your advisors, constantly bullied by the dreaded “Compliance”, to ensure that the Company is squeaky clean and that all the boxes are ticked prior to going Public. In the wake of the issues that have rattled the Gaming and Natural Resources sectors in recent times, it has never been more necessary to have the right advisors by your side as you head towards IPO.

Having sweated my way through the IPO process here, are my top ten sanity savers…

1. BE AWARE OF FEES

They say it costs thirty pounds just to climb out of bed in the morning in London. Well it is considerably more if, on one of those mornings you decide to float your company. Fees need to be paid out to Auditors, NOMADS, Brokers, Lawyers, and the Financial PR gurus. Even for a company which is not looking to raise any money it is possible to pay out in excess of half a million pounds for the required advisory team. While they can vary considerably the real issue is not the price, but the value of service.

2. RECOGNISE EXPERIENCE IN OTHERS

Ask any current AIM Board, and they will tell you that the process of bringing their business to market was both incredibly time consuming and stressful. It is therefore essential that you appoint advisors that you trust, that have a good, solid reputation and have good chemistry with . It is also important to make sure that you have your own house in order to make for a clean flotation. Keep your strategy clear and simple, assimilate the right management team and ensure that there is no legacy of accounting discrepancies in the books – the City will never forgive you.

3. CLARITY OF STRATEGY AND VISION

The key to truly unlocking value in your stock in the market is to make your story as easy to understand as possible - there will be less confusion, making your stock easier to promote and accordingly more accessible to follow. Your Brokers and Financial PR advisors will play an essential role in drawing out the investment strengths of your business.

4. BEAUTY PARADE

Word of mouth has always been one of the better ways of finding the perfect team to advise and work alongside you. The London Stock Exchange website also provides a good list of Advisors and their sectors of practice. The key for AIM however is to ensure your business is complementary to theirs – the old “horses for courses” approach. In other words, there is no point appointing an advisor that looks after companies capitalised upwards of £200 million, when you are capitalised at £10 million. You will not be a focus for them, and the chances are you will not receive the service from them which you demand and expect.

5. ASK QUESTIONS

For many Boards, IPO’ing will be a totally new and foreign experience, typically not without hurdle or faults. Your advisers will have hopefully done this many times before, so prior to hiring advisors make sure that you have all your bases covered and that you have a list of questions that you want to ask. This will save you from being in an unsuitable arrangement after the ink on your contract has barely dried.

6. COMMUNICATE, COMMUNICATE, COMMUNICATE

At the end of the day, you are paying your advisors to provide you with a level of service, and if you do not hear from them, don’t sit back and wait for them, call them up and find out what they are doing for you. At best, dealing with so many parties is like herding cats so it is important to have a good relationship with your advisors, so that you, and they know that you can pick up the phone at any time, and they know where you stand on issues relating to the Company.

7. MUCK IN

Unlike in large FTSE Companies, being the CEO of an AIM company requires a real hands on approach at all levels to ensure the smooth running of the company. You need to be a bit of jack-of-all trades, able to understand the financials, the marketing, the investor relations and the ability to deal with angry shareholders and hard nosed journalists. In short, expect to be working on all fronts to ensure that your company continues to perform well in the aftermarket. Your advisors will play a significant role in all of these areas, and you will need to be able to keep up to speed with the seemingly never ending stream of emails and phone calls which occur on a daily basis.

8. DON’T RUSH

You will only have one bite at this, and if you make a hash of your stock market debut, it will be difficult to recover. Your advisers will hopefully keep things moving at the right pace, and making sure every step is taken correctly, but you will have to take responsibility as well and make sure that you are contactable.

9. KEEP A COOL HEAD

With over 1,600 companies on AIM, competing for a comparatively small space, it is a real tussle to be heard above the roar, especially if you don’t know who you need to be speaking to. This is why you will probably have hired a public relations consultancy, and whilst you might be expecting column inches in the Financial Times, be aware that this probably won’t happen immediately. It takes time to build up a profile in the City and results will come in time, so be patient. For debut smaller companies tip sheets and small cap specialist publications may be more appropriate.

10. ENJOY THE EXPERIENCE

Is IPO’ing stressful? Yes! Is it enjoyable? It can be. The media has highlighted many examples of individuals who just don’t like running a public company – Richard Branson did not enjoy it, taking Virgin private in the Eighties after a difficult period, and Mike Ashley appears to be having a hard time at the moment having to report to the City, when all he really wants to do is run his company undisturbed. Like so many things in life you reap what you sow, so make sure you surround yourself with a good team, are well prepared to roll up your sleeves and dust off your flak jacket, and that you take advice from the people you are paying to give it. Above all remember that you are visible and that if you don’t show confidence and competence your share price will plummet, and no-one will thank you for that, least of all your retail investors who will be queuing up on the bulletin boards to knock you off your perch. Running a listed company is very different from running a private company and although it has its own set of challenges, it too can be extremely rewarding on many levels.

Article by David Barker for Executive Decisions